Roland Peens responds to Tim James: On the Strauss & Co Fine Wine Auction

By , 24 October 2019

Comment

2

Correspondence from Roland Peens, managing director of Wine Cellar and stakeholder in the Strauss & Co Fine Wine Auction programme, in response to Tim James’ Opinion & Analysis piece on the Cape Fine & Rare Wine Auction.

Dear Tim,

We regard your views of the Strauss & Co Fine Wine Auction platform as a ‘abject failure’ to be misguided and slanderous.

We aim to grow the secondary fine wine market in South Africa and more auctions can only be beneficial to increase liquidity and develop the market. There is no need to compare the Cape Fine & Rare Wine Auction with the Strauss & Co Fine Wine Auction platform as they seem to service different markets. But since you use the comparisons to determine success, please consider the facts detailed in Table 1.

Table 1 Strauss&Co CFRWA
Lots offered 556 330
Lots sold 451 328
Lots sold % 81% 99%
South Africa wineries represented 85 64
Bottles Sold (or 750ml equivalent) 2746 4410
Total Sales at Hammer Price R3 466 747 R2 623 000
Average Rand/bottle of SA wines * R1 154** R595
Average vintage of lots 2000 2007
Top 50 most expensive wines on auction 46 4
Model Profitable Subsidised
* Based on 750ml or equivalent
**R1 262 with imported wines
   

This completely contradicts many of your statements and general view. Strauss & Co Fine Wine Auctions offers a sustainable, open-market platform that maximises sellers’ proceeds.

As mentioned before on Winemag.co.za, we don’t consider unsold lots to be an indicator of success. Mature auction markets, both art and wine, rarely enjoy 100% sales. Lower unsold rates infer lower reserve prices.

Table 2 compares similar wines in both auctions. Although vintage and quantities are slightly different, there is fair room for comparison. Considering the seller receives 13.8% less than hammer price at Strauss & Co and 25% less at CFRWA, all sellers would have received higher proceeds on the Strauss & Co platform. Furthermore, the highlighted wines (Waterford, Vergelegen and Raats) were sold below current release prices.

Table 2  Strauss&Co  CFRWA
Figures based on hammer price per bottle. Number of 750 bottles or equivalent sold in brackets.
Kanonkop index R1 113 R1 031
Average (Paul Sauer, Cabernet, Pinotage) (219) (120)
Sadie Columella Vertical R2 500 R2 083
(2001-2012 and 2005-2016) (12) (36)
Vergelegen Index R1 134 R808
Average (V, GVB) (48) (60)
Rustenberg Index R826 R831
Average (Peter Barlow, John X Merriman) (72) (130)
De Morgenzon Index R896 R690
Average (Divas, Chenin Blanc, Chardonnay) (66) (108)
Raats Index R1 560 R778
Average (MR, CF) (39) (72)
Klein Constantia Vin de Constance R6 889 R3 750
  (43) (12)
Waterford The Jem R1 889 R1 333

We request that you reconsider your views and publish a correction and apology on Winemag.co.za. If you would like help in understanding the figures, our strategy or operations, we would be pleased to meet with you.

Roland Peens, Higgo Jacobs and the Strauss & Co Fine Wine Auction team.

  • Due to the inability of presenting data in table format of the comments section on Winemag.co.za, this response is published as an article.

Comments

2 comment(s)

  • Jonathan Snashall24 October 2019

    Hi Roland, Higgo

    Congrats on getting the secondary fine wine market in SA off the ground, considering it’s a debut auction – and long overdue – it’s nothing short of a roaring success and would bet my house it will go from strength to strength.

  • Tim James24 October 2019

    Firstly, a correction to the corrector. Importantly, I was specifically referring, as I made clear, to the Strauss Cape Town auction as a failure, not the Strauss “platform” as a whole. Your tables amalgamate both the Johannesburg and Cape Town results. At a function on the Monday following the Cape Town auction, at which Roland and business partner Higgo Jacobs were present as I recall, there was much discussion and a great deal of dejection about the results of that auction; the general assessment of the people there was clearly that it had been a failure.

    Secondly, you are in possession of information that was not available to me at the time of my writing. I did not have, as I pointed out, the details of the Fine & Rare results. Most significantly, I am now told that post-auction sales pushed the Strauss Cape Town sales from a depressing 63% (with the overwhelming majority of even those selling below your low estimate) to a very respectable 79%. Presumably very many of these sales were at well under reserve price (as was the sale to me). Which is somewhat less successful in terms of what you hoped to achieve from the auction.

    Nonetheless, in light of that substantial change from the announced results of the Cape Town auction, I willingly accept that my description was incorrect. I don’t see that “many of [my] statements” are contradicted – but that admittedly important one is.

    It is clear, as you say, that CFRWA’s success in terms of lots sold implies lower reserve prices. (But, equally clearly, the Strauss reserves, let alone the estimates, were too high, given current conditions, which is why the post-auction sales were needed.) I mentioned one CFRWA wine that was sold below current retail price; at that stage I didn’t know there were more. That is clearly not a mark of success, and I was over-enthusiastic in my assessment: CFRWA’s valuations were obviously too low, which detracts from their “success”, as I described it. I did also point out that the Strauss range was the more impressive one. It was, as I wrote elsewhere, “a splendid array”, especially in terms of mature wines, which would also help account for your higher prices.

    I didn’t intend to allow the inference that CFRWA might be a better platform for people to sell wine on, but I was naïve in not realising that it might have happened, and I focused too exclusively on what I saw as CFRWA’s success. You don’t specifically mention that in your complaint, but I regret that.

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